"Australian construction work done data show further contraction in the sector as declines in engineering construction continue to more than offset firm growth in residential and non-residential construction. The end to the mining boom remains a significant drag on the economy. Anecdotal evidence about Australia's residential property market is mixed. While auction clearance rates in Melbourne and Sydney remain high, in other centres they are weakening. Sydney's weekend auction clearance rates hit boom-time highs over the recent weekend and even weekday auctions are seeing strong bidding, largely driven by the RBA's latest rate cut.

The bar for further rate cuts in Australia is likely high. New RBA Governor, Phil Lowe, is a system stability expert and likely a reluctant rate cutter.

So AUD's fortunes are increasingly tied to the Fed. AUD/USD continues to rest against trend-line support ahead of Yellen's speech on Friday".

*Credit Agricole maintains a short AUD/USD position from 0.7674.

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